It’s a situation that many young entrepreneurs find themselves in — surrounded by other likeminded individuals, often friends, who want to go into business with them. Of course, in many cases these individuals have never worked together before. They only know one another through different social settings, and may, in some cases, simply be lifelong friends.
At first, it seems like a great idea, going into business with people you already consider friends. But, is it really? In your professional life, you’ve probably already realized that friendship and business do not always go hand in hand. In fact, the pressures of business can often put a tremendous strain on long-established friendships, even if those friendships are not directly related to the business in question. Think, for example, of how your life as an entrepreneur may be presenting challenges in your home life.
Given how common all of this is, we figured that we’d take the time to examine the pros and cons of going into business with friends. Hopefully after examining the advantages and disadvantages, as well as the questions you should be asking yourself, you (and your friends) will be able to make an informed decision.
Potential Benefits of Working with Friends
The real benefit of going into business with a friend is patently obvious: you know one another already. If you compare this to a situation where you might be going into business with a complete stranger, the real benefit of this becomes even more apparent. Because you already know one another, you already have some sense what each other’s work ethic is like and what value systems you each possess. This can, as you might expect, make the decision making process much easier than it otherwise might be.
Potential Disadvantages of Working with Friends
According to the Huffington Post, a recent study conducted by the Harvard Business School pointed out something alarming. In businesses where the founding members were friends before going into business with one another, the turnover rate for founders is over 25 percent higher than in businesses where this is not the case.
So, what causes this to take place? It could be a number of different things. Consider the advantages that we outlined earlier. While familiarity with one another seems like a good thing, consider how it could also lead to organizational blindness. Often businesses find their greatest success when there are competing voices. If the founding members are too much of a like mind, they’ll be less inclined to make decisions that are outside of their comfort zones. Also, the competing interests of business and friendship can lead to organizational paralysis. If there’s something that truly needs to be done but doing it will damage the friendship, will that thing get done?
Make the Right Decision
Ultimately, before committing to entering into business with a friend, you’ve got to consider the long term. Do you really feel that you’ll be able to work successfully together over the long term and intensely? Will you both be able to separate business and friendship? If you can, then you may find success. Otherwise, though, things might end badly both for your business and your friendship.